Question
Positive is exploring the acquisition of the entire share capital of a start-up operating in the pharmaceutical industry. One concern that Positive's management has is
Positive is exploring the acquisition of the entire share capital of a start-up operating in the pharmaceutical industry. One concern that Positive's management has is that though the start-up has a talented team of researchers and scientists as well as the necessary equipment and materials to manufacture products, it currently does not yet have a viable drug in the market. Positive is unsure if this investment is considered as acquiring a business.
Advise Positive's management on the accounting treatment of the proposed investment in the start-up with reference to the relevant financial reporting standard(s). (6 marks)
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